Telco - Mobile│Singapore July 21, 2014

2QFY14 RESULTS NOTE

M1 Limited M1 SP / MONE.SI

Market Cap

Avg Daily Turnover

Free Float

Current

S$3.63

Target

S$3.80 S$3.80

US$2,720m

US$1.97m

39.2%

Prev. Target

S$3,374m

S$2.47m

924.8 m shares

Up/Downside

4.7% Conviction|

|

Good but fairly priced

CIMB Analyst(s)

—————————————————————————————————————————

Kelvin GOH, CFA T (60) 3 2261 9099 E [email protected]

M1’s 1H14 core net profit was in line, forming 49% of CIMB and 50% of consensus full-year estimates. Mobile revenue grew on rising data usage, while costs were contained. 1H14 DPS of 7.0 Scts (yield: 1.9%) was declared, based on 75% payout. Our DCF-based target price (WACC: 7.2%) and earnings forecast are unchanged. M1 should continue to benefit from a) excess data usage revenues as subscribers transition to tiered-pricing plans and b) its expansion into the fixed services business. Nevertheless, given its strong share price performance, we believe that much of these positives have been priced in. As M1 is trading at premium valuations and offering lower yields vs. its Singapore telco peers, we downgrade it to Hold from Add.

Subscribers exceeding data bundle jumps to 20% Share price info Share price perf. (%)

1M

3M

12M

Relative

1.7

6.6

7.9

Absolute

3.4

8.4

Major shareholders Sunshare (Axiata) Keppel T&T Singapore Press Holdings Show Style "View Doc Map"

11 % held 29.7 19.0 13.9

Subscribers on tiered-pricing plans rose 2% pts qoq to 58% of the postpaid base. Meanwhile, subscribers that exceeded their data bundles jumped to 20% from 16% in 1Q14. Average monthly data usage rose 22% yoy to 2.8Gb in 2Q14 due to faster network and new devices. The trend of rising data usage is beneficial to M1 as it either means that it will be able to generate more revenues from excess data usage or the subscribers will upgrade to higher tier plans.

New prepaid SIM card ruling will not impact revenue Prepaid subscribers declined 111k in 2Q14 due to new regulations (effective 1 Apr 2014) that limit the maximum number of SIM cards allowed per subscriber from 10 to three. As such, existing users (with more than three SIM cards) were not allowed to register new SIM cards to replace those that have expired. Nevertheless, it did not affect M1’s prepaid revenue (+8.2% qoq) as these users simply reloaded more credit on their remaining SIM cards.

Positives priced in; Dividend yield below peers M1’s EV/EBITDA is now trading at +2 s.d. above its 10-year historical average and is at an all-time high (Figure 3). It is also at 9-16% premium to SingTel’s and StarHub’s valuations. While M1’s 2014-15 dividend yield remains decent at 4.2-4.3%, it is not outstanding and is now below SingTel’s 4.6-5.0% and StarHub’s 4.8% (Figure 8).

Results Comparison FYE Dec (S$ m) Revenue Svc revenue Operating costs EBITDA EBITDA margin (%) Svc* EBITDA mgn (%) Depn & amort. EBIT Interest expense Interest & invt inc Exceptionals Pretax profit Tax Tax rate (%) Net profit Core net profit EPS (cts) Core EPS (cts) DPS (cts)

2QFY14 2QFY13 yoy % 1QFY14 qoq % 2QFY14 2QFY13 yoy % Prev. chg chg Cum Cum chg FY14F 239.7 244.5 (2.0) 240.2 (0.2) 479.9 487.5 (1.6) 1,021.9 209.0 207.3 0.8 204.2 2.4 412.9 406.9 1.5 849.4 (156.6) (168.3) (7.0) (159.0) (1.5) (315.6) (332.4) (5.1) (683.7) 83.1 76.2 9.1 81.2 2.3 164.3 155.1 5.9 338.2 34.7 31.2 33.8 34.2 31.8 33.1 39.8 36.8 39.8 39.8 38.1 37.8 (28.0) (27.9) 0.4 (27.2) 2.9 (55.2) (55.1) 0.2 (121.4) 55.1 48.3 14.1 54.0 2.0 109.1 100.0 9.1 216.9 (1.0) (1.2) (16.7) (1.0) (2.0) (2.5) (20.0) (4.5) 0.1 0.7 (85.7) 0.6 (83.3) 0.7 0.8 (12.5) 0.1 nm (0.3) nm (0.3) (0.1) nm 54.2 47.8 13.4 53.3 1.7 107.5 98.2 9.5 212.5 (10.3) (8.6) 19.8 (10.5) (1.9) (20.8) (18.0) 15.6 (36.1) 19.0 18.0 19.7 19.3 18.3 17.0 43.9 39.2 12.0 42.8 2.6 86.7 80.2 8.1 176.4 43.9 39.2 12.0 43.1 1.9 87.0 80.3 8.3 176.4 4.7 4.3 9.3 4.5 4.4 9.2 8.8 4.5 18.9 4.7 4.3 9.3 4.5 4.4 9.2 8.8 4.5 18.9 7.0 6.8 2.9 nm 7.0 6.8 nm 15.1

Comments In-line. Largely driven by higher Mobile Data revenues. Lower due to handset cost and traffic expenses In-line. In-line. Margins to be lower in 2H due to handset sales

In-line.

In-line

In-line. 1H14 formed 49%/50% of CIMB/Consensus full year estimates In-line. SOURCE: CIMB, COMPANY REPORTS

The CIMB Stock Selection Tools (SST) are designed to complement and enhance the investment decision making process. The SST incorporate a range of analytical tools, providing ready access to key company and market data, valuation tools and charts. If you are interested in subscribing to the 'Stock Selection Tools', please contact your CIMB account manager. IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. Designed by Eight, Powered by EFA

Telco - Mobile│M1 Limited July 21, 2014

Price Close

Financial Summary

Relative to FSSTI (RHS)

3.70

111

3.60

108

3.50

105

3.40

102

3.30

99

3.20

96

3.10 4

93

3

Vol m

2 1 Jul-13

Oct-13

Jan-14

Apr-14

Source: Bloomberg

52-week share price range 3.63 3.63

3.15

3.80 Current

Dec-12A 1,077 299.1 27.8% 146.4 0.16 (10.5%) 22.53 0.15 4.02% 11.93 27.01 74.8% 43.7%

Revenue (S$m) Operating EBITDA (S$m) Operating EBITDA Margin Net Profit (S$m) Core EPS (S$) Core EPS Growth FD Core P/E (x) DPS (S$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing ROE % Change In Core EPS Estimates CIMB/consensus EPS (x)

Target

Dec-13A 1,008 316.5 31.4% 160.2 0.17 7.8% 20.80 0.21 5.79% 11.23 21.15 49.5% 43.1%

Dec-14F 1,022 338.2 33.1% 176.4 0.19 8.9% 19.14 0.15 4.16% 10.61 23.38 45.4% 42.7% 0% 1.01

Dec-15F 1,053 353.0 33.5% 184.1 0.20 4.4% 18.43 0.16 4.34% 9.90 14.00 21.6% 40.8% 0% 0.98

Dec-16F 1,088 350.3 32.2% 192.3 0.21 4.5% 17.65 0.16 4.53% 9.91 19.13 15.4% 39.1% 0% 0.97

SOURCE: CIMB, COMPANY REPORTS

M1’s CEO Karen Kooi, CFO Raymond Yeo and CMO Poopalasingam Subramaniam hosted the company’s quarterly conference call. Questions from participants largely focused on competition in Fixed Residential Broadband, outlook for mobile subscriber acquisition cost (SAC) and recent news on the potential entrance of a 4th mobile player in Singapore.

Broadband ARPU stabilising but net additions also slowing M1’s Broadband ARPU stabilised qoq in 2Q14 at S$41.90, after declining continuously since 1Q12. Management expects ARPU to remain stable going forward as it has now stopped its 3-6 months free subscription promotion. Meanwhile, M1’s fibre customer net additions further slowed down to 4k in 2Q14 (1Q14: +5k, 4Q13: +8k, 3Q13: +10k). This is because the industry’s Residential Fibre Broadband penetration has already climbed to a relatively high level of 43-44%.

SAC declined due to share bundled plans M1’s SAC declined 13.3% qoq (-19.3% yoy) to S$268 due to shared bundled plans (whereby the supplementary line was not entitled to handset subsidies). Excluding this, SAC was similar to 1Q14. We expect SAC to be sticky in the short term but could potentially decline in the medium term as handset prices, particularly for the bigger brands, could come under pressure from Chinese vendors.

Figure 1: Postpaid ARPUs stabilising; prepaid up on lower number of SIM cards S$

Figure 2: Revenue contribution S$

S$m 350

66

18

65

17

64

16

63

15

62

14

61

13

50

60

12

0

300 250 200 150

Postpaid ARPU (LHS)

Mobile voice

Prepaid ARPU

SOURCE: CIMB RESEARCH, COMPANY

Mobile non-voice

Fixed services

2Q14

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

3Q12

2Q12

1Q12

4Q11

3Q11

2Q11

1Q11

4Q10

3Q10

2Q10

1Q10

4Q09

3Q09

2Q09

1Q09

4Q08

3Q08

2Q08

1Q08

2Q14

1Q14

4Q13

3Q13

2Q13

1Q13

4Q12

3Q12

2Q12

1Q12

4Q11

3Q11

2Q11

1Q11

4Q10

3Q10

2Q10

1Q10

100

Handset sales

SOURCE: CIMB RESEARCH, COMPANY

2

Telco - Mobile│M1 Limited July 21, 2014

Figure 3: M1’s 1-yr forward EV/EBITDA 11.0

10.0 9.0 8.0

7.0 6.0 5.0 4.0 Jul-04

Jul-05

Jul-06

EV/EBITDA

Jul-07

Mean

Jul-08

1+ Std Dev

Jul-09

Jul-10

Jul-11

1- Std Dev

Jul-12

1+ 2 Std Dev

Jul-13

Jul-14

1- 2 Std Dev

SOURCE: CIMB RESEARCH, COMPANY

Figure 4: M1’s 1-yr forward P/E 20.0

18.0 16.0 14.0 12.0 10.0

8.0 6.0 Jul-04

Jul-05

Jul-06

P/E

Mean

Jul-07

Jul-08

1+ Std Dev

Jul-09

Jul-10

1- Std Dev

Jul-11

Jul-12

1+ 2 Std Dev

Jul-13

Jul-14

1- 2 Std Dev

SOURCES: CIMB, COMPANY REPORTS

Figure 5: Sector yields 12%

11% 10% 9% 8% 7% 6% 5% 4% Jul-09

Jul-10

Jul-11 M1

Jul-12 StarHub

Jul-13

Jul-14

SingTel

SOURCES: CIMB, COMPANY REPORTS

3

Telco - Mobile│M1 Limited July 21, 2014

Figure 6: Key operating statistics 2QFY14 2QFY13

yoy % 1QFY14

Key balance sheet items Net cash/(debt) Net gearing (x) Net debt/EBITDA (x) Est capex (S$m)

(244) 0.7 0.7 (28.2)

Key operating statistics Total mobile subs ('000) Prepaid Postpaid - Wireless BB subs - Postpaid voice % on tiered plans Fibre subscribers ('000)

2,003 855 1,148 1,148 58 94

2,101 985 1,116 232 884 26 67

Market share (%) Total Prepaid Postpaid

24.6 24.2 24.9

25.4 25.2 25.6

Prepaid add/qtr ('000) Postpaid add/qtr Fibre add/qtr

(124) 18 4

47 9 7

>100 100.0 (42.9)

(13) 8 5

14 62

16 62

(12.2) -

13 62

307 274

321 316

(4.4) (13.3)

294 273

1.1 46.1 268

1.1 41.2 332

-

1.1 45.1 309

Prepaid ARPU (S$) Postpaid ARPU (unadjusted)

Prepaid MOU (mins) Postpaid MOU Churn/mnth (%) Data as % of revenue Acq cost per postpaid sub ($)

chg 23.7

(198) 0.5 0.6 21.4 (231.8)

(4.7) (13.2) 2.9 (100.0) 29.9 nm 40.3

(146) 0.3 0.4 33.0

2,104 966 1,138 257 881 56 90

qoq % 2QFY14 2QFY13 chg 67.3

(185.5)

(4.8) (11.5) 0.9 (100.0) 30.3 3.6 4.4

25.0 25.0 24.9

(19.3)

853.8 125.0 (20.0)

Cum (244) 0.7 0.7 4.8

Cum (198) 0.5 0.6 33.8

2,003 855 1,148 1,148 58 94

2,101 985 1,116 232 884 26 67

24.6 24.2 24.9

25.4 25.2 25.7

yoy % Comments chg (26.0) After payment of 4Q13's special dividend in April (85.8)

(4.7) (13.2) New regulation caps SIM cards to 3 from 10 previously 2.9 (100.0) 29.9 nm Subscribers re-contract to enjoy subsidies after old contracts expire 40.3

(62) 9 5

(15) 11 8

8.7 -

16 62

16 62

-

QoQ increase due to lower sim cards after new ruling Roaming revenue stabilizes and rising Data usage offset Voice/SMS decline

4.4 0.4

328 311

328 311

-

Declining usage on rising adoption of smartphones Declining usage on rising adoption of smartphones

1.1 45.6 289

1.1 40.4 325

-

(13.3)

nm (14.3) (40.0) Net adds slowing as industry penetration has hit 43-44%

(11.1) Decline due to sale of shared bundled plans SOURCE: CIMB RESEARCH, COMPANY

Figure 7: Revenue and cost composition (S$m) S$m Mobile services - Postpaid - Prepaid IDD Fixed services Handset Sales Service Revenue Operating Revenue % of revenue Handset cost Traffic expense Leased circuit cost Other cost of sales Staff Costs Advertising& promo Bad debt provision G&A and others Total expenses EBITDA margin (%)

2QFY14

2QFY13

167.9 147.6 20.3 23.7 17.4 30.7 209.0 239.7

162.4 140.2 22.2 29.6 15.3 37.2 207.3 244.5

2QFY14

2QFY13

22.0 6.0 3.3 4.6 11.6 2.2 1.1 11.1 65.3 34.7

26.3 7.6 3.1 3.9 10.8 2.9 1.2 10.2 68.9 31.1

yoy % chg 3.4 5.3 (8.6) (19.9) 13.7 (17.5) 0.8 (2.0)

1QFY14 164.0 145.0 18.7 24.1 16.1 36.2 204.2 240.4

qoq % chg 2.4 1.8 8.6 (1.7) 8.1 (15.2) 2.4 (0.3)

2QFY14 Cum 331.6 292.6 39.0 47.8 33.5 66.9 412.9 479.8

yoy % 1QFY14 qoq % 2QFY14 % pt chg % pt chg (4.3) 23.6 (1.5) 22.8 (1.7) 6.4 (0.4) 6.2 0.1 3.1 0.1 3.2 0.7 3.8 0.8 4.2 0.8 11.5 0.1 11.5 (0.7) 2.3 (0.1) 2.3 (0.1) 1.1 0.0 1.1 1.0 11.1 0.0 11.1 (3.6) 66.3 (1.0) 65.8 3.6 33.7 1.0 34.2

2QFY13 Cum 318.7 275.6 43.1 58.6 29.6 80.6 406.9 487.5 2QFY13 25.9 7.2 3.2 4.0 10.9 2.6 1.3 10.3 68.2 31.8

yoy % chg Comments 4.0 Commendable growth 6.2 Higher data revenues as more subscribers exceeded their bundles (9.5) (18.4) Lower international call volumes and tariffs 13.2 Increase in fiber customers (17.0) Customers waiting for new popular handsets 1.5 (1.6) yoy % (3.1) (1.0) 0.0 0.2 0.7 (0.3) (0.2) 0.8 (2.4) 2.4

Lower handset sales volume Lower international traffic volume

Higher due to salary increments Better collection rate Higher due to fiber backhaul expansion

SOURCES: CIMB, COMPANY REPORTS

4

Telco - Mobile│M1 Limited July 21, 2014

Figure 8: Peer Comparisons Company

Bloomberg Recom. Ticker

M1 Limited StarHub SingTel Singapore average

M1 SP STH SP ST SP

Hold Hold Add

Price (local curr) 3.63 4.13 3.94

Target Market Cap Core P/E (x) 3-year EPS EV/EBITDA (x) Price (US$ m) CAGR (%) (local curr) CY2014 CY2015 CY2014 CY2015 3.80 2,717 19.2 18.4 5.6% 10.7 10.0 4.10 5,735 19.5 18.1 3.9% 9.8 9.2 4.10 50,590 16.2 15.1 7.2% 9.2 8.3 16.6 15.5 6.8% 9.3 8.5

3-year EBITDA CAGR (%) 2.8% 4.0% 7.6% 7.1%

Dividend Yield (%) CY2014 CY2015 4.2% 4.3% 4.8% 4.8% 4.6% 5.0% 4.6% 4.9%

SOURCES: CIMB, COMPANY REPORTS

5

Telco - Mobile│M1 Limited July 21, 2014

Balance Sheet

Profit & Loss (S$m) Total Net Revenues Gross Profit Operating EBITDA Depreciation And Amortisation Operating EBIT Financial Income/(Expense) Pretax Income/(Loss) from Assoc. Non-Operating Income/(Expense) Profit Before Tax (pre-EI) Exceptional Items Pre-tax Profit Taxation Exceptional Income - post-tax Profit After Tax Minority Interests Preferred Dividends FX Gain/(Loss) - post tax Other Adjustments - post-tax Net Profit Recurring Net Profit Fully Diluted Recurring Net Profit

Dec-13A 1,008 593 316 (119) 197 (4) 0 0 193 0 193 (33) 0 160 0 0

Dec-14F 1,022 612 338 (121) 217 (4) 0 0 212 0 212 (36) 0 176 0 0

160 160 160

Dec-15F 1,053 633 353 (127) 226 (4) 0 0 222 0 222 (38) 0 184 0 0

176 176 176

184 184 184

(S$m) Total Cash And Equivalents Total Debtors Inventories Total Other Current Assets Total Current Assets Fixed Assets Total Investments Intangible Assets Total Other Non-Current Assets Total Non-current Assets Short-term Debt Current Portion of Long-Term Debt Total Creditors Other Current Liabilities Total Current Liabilities Total Long-term Debt Hybrid Debt - Debt Component Total Other Non-Current Liabilities Total Non-current Liabilities Total Provisions Total Liabilities Shareholders' Equity Minority Interests Total Equity

Dec-16F 1,088 645 350 (114) 236 (4) 0 0 232 0 232 (39) 0 192 0 0

192 192 192

Dec-14F 54.3 140.0 28.0 20.9 243.1 658.0 0.0 127.7 0.1 785.8 0.0

Dec-15F 148.3 129.8 28.8 20.9 327.8 617.8 0.0 127.7 0.1 745.6 0.0

Dec-16F 171.1 119.2 29.8 20.9 341.0 593.1 0.0 191.7 0.1 784.9 0.0

181.0 53.8 234.8 250.0

187.3 53.8 241.1 250.0

191.7 53.8 245.5 250.0

202.1 53.8 255.9 250.0

106.6 356.6 0.0 591.4 395.0 0.0 395.0

106.6 356.6 0.0 597.7 431.1 0.0 431.1

106.6 356.6 0.0 602.1 471.3 0.0 471.3

106.6 356.6 0.0 612.5 513.3 0.0 513.3

Key Ratios

Cash Flow (S$m) EBITDA Cash Flow from Invt. & Assoc. Change In Working Capital (Incr)/Decr in Total Provisions Other Non-Cash (Income)/Expense Other Operating Cashflow Net Interest (Paid)/Received Tax Paid Cashflow From Operations Capex Disposals Of FAs/subsidiaries Acq. Of Subsidiaries/investments Other Investing Cashflow Cash Flow From Investing Debt Raised/(repaid) Proceeds From Issue Of Shares Shares Repurchased Dividends Paid Preferred Dividends Other Financing Cashflow Cash Flow From Financing Total Cash Generated Free Cashflow To Equity Free Cashflow To Firm

Dec-13A 316.5

Dec-14F 338.2

Dec-15F 353.0

Dec-16F 350.3

21.6

12.2

13.7

20.0

4.4 (3.5) (4.4) (32.6) 302.0 (125.3) 0.0 2.9 0.0 (122.4) (22.0) 21.5 0.0 (136.3)

4.4 0.0 (4.4) (36.1) 314.3 (130.0) 0.0 (40.0) 0.0 (170.0) 0.0 30.0 0.0 (170.3)

4.4 0.0 (4.4) (37.7) 329.0 (86.5) 0.0 0.0 0.0 (86.5) 0.0 0.0 0.0 (143.9)

4.4 0.0 (4.4) (39.4) 330.9 (89.5) 0.0 (64.0) 0.0 (153.5) 0.0 0.0 0.0 (150.2)

0.0 (136.8) 42.8 157.6 184.1

(4.4) (144.7) (0.4) 144.3 148.8

(4.4) (148.3) 94.2 242.5 247.0

(4.4) (154.6) 22.8 177.4 181.9

Revenue Growth Operating EBITDA Growth Operating EBITDA Margin Net Cash Per Share (S$) BVPS (S$) Gross Interest Cover Effective Tax Rate Net Dividend Payout Ratio Accounts Receivables Days Inventory Days Accounts Payables Days ROIC (%) ROCE (%)

Group Mobile Subscribers (m) Group Fixed Voice Subscribers (m) Grp fixed brdband subscribers (m) Group Pay TV Subs (m) Group Mobile ARPU (US$/mth) Grp fixed voice ARPU (US$/mth) Grp fixed brdband ARPU (US$/mth) Group Pay TV ARPU (US$/mth)

20

15 10 5

Jan-11 M1 Limited

Jan-12

Dec-13A (6.42%) 5.80% 31.4% (0.21) 0.43 43.82 16.9% 99.4% 58.83 27.37 177.7 22.7% 31.2%

Dec-14F 1.42% 6.88% 33.1% (0.21) 0.46 48.20 17.0% 65.6% 50.86 25.40 163.9 25.5% 32.7%

Dec-15F 3.00% 4.36% 33.5% (0.11) 0.50 50.27 17.0% 65.6% 46.77 24.71 164.8 25.3% 32.3%

Dec-16F 3.35% (0.77%) 32.2% (0.08) 0.55 52.46 17.0% 65.6% 41.89 24.25 162.8 28.5% 31.8%

Dec-13A 2.11 N/A 0.09 N/A 27.9 N/A 37 N/A

Dec-14F 2.16 N/A 0.12 N/A 29.4 N/A 34 N/A

Dec-15F 2.21 N/A 0.15 N/A 29.9 N/A 32 N/A

Dec-16F 2.26 N/A 0.18 N/A 29.9 N/A 32 N/A

Key Drivers

12-month Forward Rolling FD P/E (x) 25

0 Jan-10

Dec-13A 54.6 144.8 29.1 21.5 250.0 649.4 0.0 87.7 0.1 737.2 0.0

Jan-13 SingTel

Jan-14 Starhub

6

Telco - Mobile│M1 Limited July 21, 2014

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Regulated by Australian Securities & Investments Commission Securities and Futures Commission Hong Kong Financial Services Authority of Indonesia Securities and Exchange Board of India (SEBI) Securities Commission Malaysia Monetary Authority of Singapore Financial Services Commission and Financial Supervisory Service Financial Supervisory Commission Securities and Exchange Commission Thailand

(i) As of July 21, 2014 CIMB has a proprietary position in the securities (which may include but not limited to shares, warrants, call warrants and/or any other derivatives) in the following company or companies covered or recommended in this report: (a) M1 Limited, SingTel, Starhub (ii) As of July 21, 2014, the analyst(s) who prepared this report, has / have an interest in the securities (which may include but not limited to shares, warrants, call warrants and/or any other derivatives) in the following company or companies covered or recommended in this report: (a) The information contained in this research report is prepared from data believed to be correct and reliable at the time of issue of this report. CIMB may or may not issue regular reports on the subject matter of this report at any frequency and may cease to do so or change the periodicity of reports at any time. CIMB is under no obligation to update this report in the event of a material change to the information contained in this report. This report does not purport to contain all the information that a prospective investor may require. CIMB or any of its affiliates does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information and opinion contained in this report. Neither CIMB nor any of its affiliates nor its related persons shall be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof. This report is general in nature and has been prepared for information purposes only. It is intended for circulation amongst CIMB and its affiliates’ clients generally and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. The information and opinions in this report are not and should not be construed or considered as an offer, recommendation or solicitation to buy or sell the subject securities, related investments or other financial instruments thereof. Investors are advised to make their own independent evaluation of the information contained in this research report, consider their own individual investment objectives, financial situation and particular needs and consult their own professional and financial advisers as to the legal, business, financial, tax and other aspects before participating in any transaction in respect of the securities of company(ies) covered in this research report. The securities of such company(ies) may not be eligible for sale in all jurisdictions or to all categories of investors. Australia: Despite anything in this report to the contrary, this research is provided in Australia by CIMB Securities (Australia) Limited (“CSAL”) (ABN 84 002 768 701, AFS Licence number 240 530). CSAL is a Market Participant of ASX Ltd, a Clearing Participant of ASX Clear Pty Ltd, a Settlement Participant of ASX Settlement Pty Ltd, and, a participant of Chi X Australia Pty Ltd. This research is only available in Australia to persons who are “wholesale clients” (within the meaning of the Corporations Act 2001 (Cth)) and is supplied solely for the use of such wholesale clients and shall not be distributed or passed on to any other person. This research has been prepared without taking into account the objectives, financial situation or needs of the individual recipient. France: Only qualified investors within the meaning of French law shall have access to this report. This report shall not be considered as an offer to subscribe to, or used in connection with, any offer for subscription or sale or marketing or direct or indirect distribution of financial instruments and it is not intended as a solicitation for the purchase of any financial instrument. Hong Kong: This report is issued and distributed in Hong Kong by CIMB Securities Limited (“CHK”) which is licensed in Hong Kong by the Securities and Futures Commission for Type 7

Telco - Mobile│M1 Limited July 21, 2014

1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) activities. Any investors wishing to purchase or otherwise deal in the securities covered in this report should contact the Head of Sales at CIMB Securities Limited. The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Conduct Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CHK has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CHK. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CHK. Unless permitted to do so by the securities laws of Hong Kong, no person may issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the securities covered in this report, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong). India: This report is issued and distributed in India by CIMB Securities (India) Private Limited (“CIMB India”) which is registered with SEBI as a stock-broker under the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 and in accordance with the provisions of Regulation 4 (g) of the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013, CIMB India is not required to seek registration with SEBI as an Investment Adviser. The research analysts, strategists or economists principally responsible for the preparation of this research report are segregated from the other activities of CIMB India and they have received compensation based upon various factors, including quality, accuracy and value of research, firm profitability or revenues, client feedback and competitive factors. Research analysts', strategists' or economists' compensation is not linked to investment banking or capital markets transactions performed or proposed to be performed by CIMB India or its affiliates. Indonesia: This report is issued and distributed by PT CIMB Securities Indonesia (“CIMBI”). The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Conduct Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBI has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CIMBI. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBI. Neither this report nor any copy hereof may be distributed in Indonesia or to any Indonesian citizens wherever they are domiciled or to Indonesia residents except in compliance with applicable Indonesian capital market laws and regulations. Malaysia: This report is issued and distributed by CIMB Investment Bank Berhad (“CIMB”). The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Conduct Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMB has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CIMB. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB. New Zealand: In New Zealand, this report is for distribution only to persons whose principal business is the investment of money or who, in the course of, and for the purposes of their business, habitually invest money pursuant to Section 3(2)(a)(ii) of the Securities Act 1978. Singapore: This report is issued and distributed by CIMB Research Pte Ltd (“CIMBR”). Recipients of this report are to contact CIMBR in Singapore in respect of any matters arising from, or in connection with, this report. The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Conduct Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBR has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only. If the recipient of this research report is not an accredited investor, expert investor or institutional investor, CIMBR accepts legal responsibility for the contents of the report without any disclaimer limiting or otherwise curtailing such legal responsibility. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBR.. As of July 21, 2014, CIMBR does not have a proprietary position in the recommended securities in this report. South Korea: This report is issued and distributed in South Korea by CIMB Securities Limited, Korea Branch ("CIMB Korea") which is licensed as a cash equity broker, and regulated by the Financial Services Commission and Financial Supervisory Service of Korea. The views and opinions in this research report are our own as of the date hereof and are subject to change, and this report shall not be considered as an offer to subscribe to, or used in connection with, any offer for subscription or sale or marketing or direct or indirect distribution of financial investment instruments and it is not intended as a solicitation for the purchase of any financial investment instrument. This publication is strictly confidential and is for private circulation only, and no part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB Korea. Sweden: This report contains only marketing information and has not been approved by the Swedish Financial Supervisory Authority. The distribution of this report is not an offer to sell to any person in Sweden or a solicitation to any person in Sweden to buy any instruments described herein and may not be forwarded to the public in Sweden. Taiwan: This research report is not an offer or marketing of foreign securities in Taiwan. The securities as referred to in this research report have not been and will not be registered with the Financial Supervisory Commission of the Republic of China pursuant to relevant securities laws and regulations and may not be offered or sold within the Republic of China through a public offering or in circumstances which constitutes an offer or a placement within the meaning of the Securities and Exchange Law of the Republic of China that requires a registration or approval of the Financial Supervisory Commission of the Republic of China. Thailand: This report is issued and distributed by CIMB Securities (Thailand) Company Limited (CIMBS). The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Conduct Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBS has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CIMBS. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBS. Corporate Governance Report: The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the Market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that date. CIMBS does not confirm nor certify the accuracy of such survey result. Score Range: Description:

90 - 100 Excellent

80 - 89 Very Good

70 - 79 Good

Below 70 or N/A

No Survey Result

United Arab Emirates: The distributor of this report has not been approved or licensed by the UAE Central Bank or any other relevant licensing authorities or governmental agencies in the United Arab Emirates. This report is strictly private and confidential and has not been reviewed by, deposited or registered with UAE Central Bank or any other licensing authority or governmental agencies in the United Arab Emirates. This report is being issued outside the United Arab Emirates to a limited number of institutional investors and must not be provided to any person other than the original recipient and may not be reproduced or used for any other purpose. Further, the information contained in this report is not intended to lead to the sale of investments under any subscription agreement or the conclusion of any other contract of whatsoever nature within the territory of the United Arab Emirates. United Kingdom and Europe: In the United Kingdom and European Economic Area, this report is being disseminated by CIMB Securities (UK) Limited (“CIMB UK”). CIMB UK is

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authorised and regulated by the Financial Conduct Authority and its registered office is at 27 Knightsbridge, London, SW1X 7YB. This report is for distribution only to, and is solely directed at, selected persons on the basis that those persons: (a) are persons that are eligible counterparties and professional clients of CIMB UK; (b) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Order”); (c) are persons falling within Article 49 (2) (a) to (d) (“high net worth companies, unincorporated associations etc”) of the Order; (d) are outside the United Kingdom; or (e) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with any investments to which this report relates may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). This report is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this report relates is available only to relevant persons and will be engaged in only with relevant persons. Only where this report is labelled as non-independent, it does not provide an impartial or objective assessment of the subject matter and does not constitute independent "investment research" under the applicable rules of the Financial Conduct Authority in the UK. Consequently, any such non-independent report will not have been prepared in accordance with legal requirements designed to promote the independence of investment research and will not subject to any prohibition on dealing ahead of the dissemination of investment research. United States: This research report is distributed in the United States of America by CIMB Securities (USA) Inc, a U.S.-registered broker-dealer and a related company of CIMB Research Pte Ltd, CIMB Investment Bank Berhad, PT CIMB Securities Indonesia, CIMB Securities (Thailand) Co. Ltd, CIMB Securities Limited, CIMB Securities (Australia) Limited, CIMB Securities (India) Private Limited, and is distributed solely to persons who qualify as "U.S. Institutional Investors" as defined in Rule 15a-6 under the Securities and Exchange Act of 1934. This communication is only for Institutional Investors whose ordinary business activities involve investing in shares, bonds and associated securities and/or derivative securities and who have professional experience in such investments. Any person who is not a U.S. Institutional Investor or Major Institutional Investor must not rely on this communication. The delivery of this research report to any person in the United States of America is not a recommendation to effect any transactions in the securities discussed herein, or an endorsement of any opinion expressed herein. CIMB Securities (USA) Inc, is a FINRA/SIPC member and takes responsibility for the content of this report. For further information or to place an order in any of the above-mentioned securities please contact a registered representative of CIMB Securities (USA) Inc. Other jurisdictions: In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is only for distribution to professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions. Distribution of stock ratings and investment banking clients for quarter ended on 30 June 2014 1467 companies under coverage for quarter ended on 30 June 2014 Rating Distribution (%)

Investment Banking clients (%)

Outperform/Buy/Trading Buy/Add

58.9%

7.2%

Neutral/Hold

27.9%

3.9%

Underperform/Sell/Trading Sell/Reduce

13.2%

1.0%

Spitzer Chart for stock being researched ( 2 year data )

M1 Limited (M1 SP) Price Close

3.70

3.80

4.10

4.10

3.65

3.60

2.91

2.96

Recommendations & Target Price

2.86

3.50 3.30 3.10 2.90 2.70 2.50

Add

2.30 Jul-12

Outperform

Hold

Nov-12

Neutral

Mar-13

Reduce

Underperform

Jul-13

Trading Buy

Nov-13

Trading sell

Not Rated

Mar-14

As at the time of publishing this report CIMB is phasing in an absolute recommendation structure for stocks (Framework #1). Please refer to all frameworks for a definition of any recommendations stated in this report.

CIMB Recommendation Framework #1 Stock Ratings Add Hold Reduce

Definition The stock’s total return is expected to exceed 10% over the next 12 months. The stock’s total return is expected to be between 0% and positive 10% over the next 12 months. The stock’s total return is expected to fall below 0% or more over the next 12 months.

The total expected return of a stock is defined as the sum of the: (i) percentage difference between the target price and the current price and (ii) the forward net dividend yields of the stock. Stock price targets have an investment horizon of 12 months. Sector Ratings Overweight Neutral Underweight

Definition An Overweight rating means stocks in the sector have, on a market cap-weighted basis, a positive absolute recommendation. A Neutral rating means stocks in the sector have, on a market cap-weighted basis, a neutral absolute recommendation. An Underweight rating means stocks in the sector have, on a market cap-weighted basis, a negative absolute recommendation.

Country Ratings Overweight Neutral Underweight

Definition An Overweight rating means investors should be positioned with an above-market weight in this country relative to benchmark. A Neutral rating means investors should be positioned with a neutral weight in this country relative to benchmark. An Underweight rating means investors should be positioned with a below-market weight in this country relative to benchmark.

CIMB Stock Recommendation Framework #2 * Outperform Neutral Underperform Trading Buy Trading Sell

The stock's total return is expected to exceed a relevant benchmark's total return by 5% or more over the next 12 months. The stock's total return is expected to be within +/-5% of a relevant benchmark's total return. The stock's total return is expected to be below a relevant benchmark's total return by 5% or more over the next 12 months. The stock's total return is expected to exceed a relevant benchmark's total return by 3% or more over the next 3 months. The stock's total return is expected to be below a relevant benchmark's total return by 3% or more over the next 3 months.

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* This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand, Jakarta Stock Exchange, Australian Securities Exchange, Taiwan Stock Exchange and National Stock Exchange of India/Bombay Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons. CIMB Research Pte Ltd (Co. Reg. No. 198701620M)

CIMB Stock Recommendation Framework #3 ** Outperform Neutral Underperform Trading Buy Trading Sell

Expected positive total returns of 10% or more over the next 12 months. Expected total returns of between -10% and +10% over the next 12 months. Expected negative total returns of 10% or more over the next 12 months. Expected positive total returns of 10% or more over the next 3 months. Expected negative total returns of 10% or more over the next 3 months.

** This framework only applies to stocks listed on the Korea Exchange, Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons. Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2013. AAV – Good, ADVANC - Excellent, AMATA - Very Good, ANAN – Good, AOT - Excellent, AP - Very Good, BANPU - Excellent , BAY - Excellent , BBL - Excellent, BCH – Good, BCP - Excellent, BEC - Very Good, BGH - not available, BJC – Very Good, BH - Very Good, BIGC - Very Good, BTS - Excellent, CCET – Very Good, CENTEL – Very Good, CK Excellent, CPALL - Very Good, CPF – Excellent, CPN - Excellent, DELTA - Very Good, DTAC - Excellent, EGCO – Excellent, GLOBAL - Good, GLOW - Very Good, GRAMMY – Excellent, HANA - Excellent, HEMRAJ - Excellent, HMPRO - Very Good, INTUCH – Excellent, ITD – Very Good, IVL - Excellent, JAS – Very Good, KAMART – not available, KBANK - Excellent, KKP – Excellent, KTB - Excellent, LH - Very Good, LPN - Excellent, MAJOR – Very Good, MAKRO – Very Good, MCOT - Excellent, MEGA – not available, MINT - Excellent, PS - Excellent, PSL - Excellent, PTT - Excellent, PTTGC - Excellent, PTTEP - Excellent, QH - Excellent, RATCH - Excellent, ROBINS - Excellent, RS – Excellent, SAMART – Excellent, SC – Excellent, SCB - Excellent, SCC - Excellent, SCCC - Very Good, SIRI – Very Good, SPALI - Excellent, STA - Good, STEC - Very Good, TCAP Excellent, THAI - Excellent, THCOM – Excellent, TICON – Very Good, TISCO - Excellent, TMB - Excellent, TOP - Excellent, TRUE - Excellent, TTW – Excellent, TUF - Very Good, VGI – Excellent, WORK – Good.

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